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HomeMy WebLinkAboutPUBLIC HEARING - 2017-10-09 - BROWNFIELD LIVONIA MARKET PLACE II CITY OF LIVONIA PUBLIC HEARING Minutes of Meeting Held on Wednesday, October 9, 2017 ______________________________________________________________________ A Public Hearing of the Council of the City of Livonia was held at the City Hall Auditorium on Monday, October 9, 2017. MEMBERS PRESENT: Kathleen E. McIntyre, President Brandon M. Kritzman, Vice President Scott Bahr Maureen Miller Brosnan Jim Jolly Brian Meakin Cathy K. White MEMBERS ABSENT: None OTHERS PRESENT: Mayor Dennis Wright Don Knapp, City Attorney Mark Taormina, City Planner Marilyn Mootsey, Public Hearing Recorder This is a Public Hearing to consider the adoption of a resolution approving a Brownfield Plan and development and reimbursement agreement of the City of Livonia Brownfield Redevelopment Authority for the former Farmer Jack Supermarket property, pursuant to and in accordance with Act No. 381 of Public Acts of 1996, as amended. This comes to us from Jared Belka of Warner, Norcross & Judd, LLP, on behalf of Livonia Market II, LLC. This is for property located on the south side of Seven Mile Road between Middlebelt Road and Melvin Avenue (29601, 29659 and 29701 Seven Mile Road), pursuant to and in accordance with the provisions of Act 381 of the Public Acts of the State of Michigan of 1996, as amended. The City Clerk has mailed a notice to the Petitioner and to all parties having interest in the Brownfield Plan of the Livonia Brownfield Redevelopment Authority including all taxing authorities for property located on the south side of Seven Mile Road between Middlebelt Road and Melvin Avenue, Livonia, MI. There were seven people present in the audience. The Public Hearing was called to order at 7:18 p.m. with President Kathleen E. McIntyre presiding. The Public Hearing is now open for comments. Please state clearly your name and address before making your comments. Zarbo: Good evening and thanks to the Council and staff. My name is Carl Zarbo. I’m the Director of Construction for Lormax Stern Development Company 2 and we are the Owner and Manager of the Livonia Market II. With me tonight from Warner Norcross & Judd is Kurt Brauer, and again, that’s the legal firm that put together the Brownfield Redevelopment and Brownfield Reimbursement documents for us. Just real briefly again tonight because I know all of you guys have been through this for quite some time, we’re here again tonight to request a Brownfield Plan and Brownfield Redevelopment consideration. It’s for the ten acre site that’s at 29659 Seven Mile and as it was referenced, that’s the former Farmer Jack, and again, that’s been closed for over nine years now. We have been reviewed and there was an approving resolution from the Brownfield Authority to proceed to the Council. Ultimately again what we’d like to achieve with this redevelopment is to demolish the existing Farmer Jacks and if any of you have been out there, it’s gone and all the debris from the building has been removed. We also have removed all of the old infrastructure, all of the landscaping, all of the irrigation, all of the old infrastructure has also been removed. We have received approval from the City to proceed with a 37,000 square foot L.A. Fitness on 4.474 acres. Again, if you’ve been out there you can just start to see the pad where that building will reside. That pad is just starting to take shape. Also, we have been approved for an outbuilding to the west and that outlot B is approved to be 8,060 square feet, and again, that’s intended to be a multi-tenant building. There is an additional outlot, outlot A, that is the outlot to the east, and again, we have talked about that as future use. That has heated up and cooled off, heated up and cooled off, but that is still on the site plan. That outlot, I think on all of the site plans, shows not to exceed 10,000 square feet. As I had mentioned earlier to Mark, it looks like interest in that building is probably going to be considerably less than 10,000 square feet. Everything we’re looking at is 8,000 square foot or less. So, the rationale for the Brownfield is really, we believe, fairly simple. The building that we have demolished was vacant since 2007, and again, we were not able to find a readaptive or repurpose use for that building, and we took quite some time, as you folks know, to attempt that and actually that would have made some things in our life simpler as it related to grandfathering in some items. Also, it had been established that the building is functionally obsolete and thus again, was demolished. The site did not comply with current Wayne County storm water management. So, what has been designed, and basically you can see the outline of the forebay and the retention pond if you’re out at the site as we speak today, but you will have a retention system that has been designed for a hundred year storm, and then again you can see that’s pretty well dug out, staked out, and you can get a pretty good idea of what that’s going to look like if you’re out there today. Again, as we mentioned, all of the old ineffective, inefficient infrastructure, all of the underground utilities have been removed. That will all be replaced with new state of the art much more efficient utilities. Again, we wanted to mention that the redevelopment is a substantial downloading. The old Farmer Jack was 110,000 square feet. 3 We’re coming back with buildings in the neighborhood of 55,000 square feet, so substantially less load on the system and what that does is give you more green space for the site and certainly it will perk much more effectively and it greatly enhances that pervious and pervious ratio and again, as we mentioned, with the storm water retention pond you also have a substantial increase in the quality of the storm water that’s going into your system. The redevelopment will take basically a vacant property that has been underperforming, and at a taxable value to you folks, at about a million three and certainly increase that taxable value to the City of Livonia and certainly enhance your tax revenue. The redevelopment also has and will continue to spur considerable dollars for municipal construction fees. We are in with these wonderful people on a regular basis who have helped us get all of that paperwork straight and all of the checks straightened out. And we would also mention that this, like the project across the street, will create an ongoing income stream for your Brownfield Rehabilitation Authority. So, for every dollar that is ultimately, if it’s approved in a Brownfield Rehabilitation, there is an administrative fee that goes to your Brownfield Authority. Also, if you’re out there, there’s quite a few people working on the site as we speak, that will continue for the next 6 months, so there are both construction jobs, which are temporary, but as the structures are built there will be permanent retail jobs that will be long lasting as these buildings are developed and opened. Also, we believe the City gets to enjoy new buildings, new elements, and certainly a much greater taxable value. The Brownfield Plan and the Redevelopment, or the Reimbursement rather, has been set up very similar to across the street. We certainly have adjusted this plan to reflect the current status of Act 381, and again, we brought in our legal counsel to try to have this much simpler and a lot easier to read and understand than sort of what we went through with Mr. Knapp 12 or 15 years ago on the first Brownfield. I think we’ve got this one pretty tight and to the point, and I think it’s a much easier read as is the reimbursement schedule. And with that, to talk about the actual plan, I’d like to have Kurt come up and speak. Brauer: Thank you, Karl. Kurt Brauer. I’m with the law firm of Warner, Norcross & Judd, 2000 Town Center, Suite 2700, Southfield, Michigan. I appreciate you taking the time to hear us tonight. So, the Brownfield Plan is a relatively straightforward plan, which is a local capture only plan. The total investment is about $15,000,000 projected for the site. The Brownfield Plan anticipates the capture of the extraordinary cost of repurposing this site of about $2.5 million, which is broken down, kind of along the lines of demolition, half million, $550,000 in the plan, and these are all estimates based on what the developer knew at the time. About a million one in site preparation, which includes a lot of the retention, detention pond systems. Another half million dollars in public infrastructure, that’s infrastructure water, sewer, those sorts of things that sit in the City Rights of Way, as well as nominal amounts for environment evaluation, based on 4 environmental assessment and lead and asbestos investigation and abatement. What you will see in Brownfield Plan, it’s technically an 18 year plan, 13 years the developer went into state capturing, almost all of the local tax increment, so it’s about $200,000 a year at a start and goes up at about 1% a year. There is, you will note, if you look at the table in the back, the Brownfield Plan anticipates a $10,000 a year administrative fee going to the City to support the City in its efforts to administer the Brownfield Plan. In addition, there are 5 years at the end of the Plan that are designed for the City to capture the entire local tax increment which then can be used to facilitate additional projects. So, the total that the City would capture under that plan, five years afterwards, is about $1,100,000, a little bit north of $1,100,000, which then could be used to further invest in the City in other Brownfield Projects. There is no interest, no developers interest, that’s being captured, so we’re not asking the City to loan us the money and pay us interest, so, and there’s a little bit of school tax captured, about $3,000 to pay for some of the environmental costs up front, so really it’s kind of a cost share. The other thing I would point out that these are all, you know, the tax increment is just that. These are new tax dollars to the City that will be captured by the developer to pay for his extraordinary cost. The existing tax base the City will continue to get. The other thing that I would point out, as you’re probably aware, this leverage is not just the local tax, which would turn out to be about $1,700,000 for the City, would leverage the other tax jurisdictions that are capturable on a local basis, so County, Intermediate School District and those types of taxes. So, with that, if you have any questions, Karl and I would be happy to answer them. McIntyre: Thank you Mr. Brauer. Brosnan: Madam Chair? McIntyre: Yes, Ms. Brosnan. Brosnan: I totally agree with the characterization of this property is functionally obsolete, and I like the proposal, and I agree that a Brownfield Establishment here is appropriate, and I know I’ll be offering an approving resolution. McIntyre: Okay, thank you. Meakin: Madam Chair? McIntyre: Yes, Councilmember Meakin. Meakin: To the Petitioner. What are the extraordinary costs in developing this project? 5 Zarbo: What there is is in your plan, there’s actually a chart. It is page 5 of 8. Brosnan: It’s on page 8. Zarbo: It’s Table 1. And really what it does, is it starts with the standard definition of really what are eligible cost, and as Kurt mentioned, and I think I’ve tried to give you this before, it’s a nice little trick to remember. The eligible cost, the easiest way to remember, its demolition and dirt down. So, it has nothing to do with when you go vertical or come out of the ground. So, what they are, in answer to your question, is the baseline environmental and any asbestos, or any other form of hazardous material that’s abated or removed, and that’s all been completed, obviously. The demolition of the existing structure, the site preparation and the infrastructure improvements, and those two items are really where we got into the storm water management, which again, if you were on a Greenfield, and there is none, but literally across the street would not have had those costs. And that’s really why those become the eligible, or the items that you’re attempting to be reimbursed for. Did that answer your question? Meakin: I see that and, yes. Next, the LA Fitness is going to be a separately owned piece? Has that sale been completed? th Zarbo: The sale has been completed. It was completed on July 29. Meakin: So, your portion of the property is only going to be six acres that’s left? Zarbo: We will have to balance, and it’s not exactly 10 acres, but it’s roughly 10 acres there, 4.474. We will retain the balance. And again, it shows the lot split was three lots, and the reason for that again was because our property, or the remaining property is not contiguous, therefore it took two separate parcel numbers. Meakin: Okay, thank you. Kritzman: Madam Chair? McIntyre: Vice President Kritzman. Kritzman: Thank you, Madam Chair. In looking at that chart that you referenced, Mr. Zarbo, I really will be directing this question more so to Mr. Taormina or perhaps Mr. Knapp. Do we typically include a contingency in this sort of approach? I don’t recall as having that last time around, but this has a 15% contingency, and I guess I would be curious to see what the purpose behind that is, and where that cost may be anticipated in and if it’s not used, how does it affect the outcome of our decision today? 6 Taormina: Well, as it affects the outcome, it won’t because they would have to submit, the developer will have to submit the true cost of development for reimbursement. So, the contingency is really, I think, just a buffer that they’re looking at should some of those costs exceed what they projected. But, only the true cost associated with each one of these categories is reimbursable. Nothing above or beyond that that would fall under the title of contingency without that proof of expenditure. Kritzman: So, if it’s not utilized then it’s not reimbursed. Taormina: That is correct. Kritzman: Thank you. Zarbo: Two things, if I may. We’ve had it in the project across the street too, and if you can imagine, we’re digging in the dirt, at basically a fifty year old site, and certainly never exactly certain of what we’ll find. But again, as a refresher with this, as Mark said, this one is pretty front end loaded, in fact, you know, we’ve spent about, almost, we’ve spent $1,500,000 probably, as of the end of the day today. What will happen, as is indicated by the work that Kurt’s firm has done, we won’t even begin submitting this until into 2019, so it is only on actual dollars that are spent. We’ve typically come in with a book that’s usually around a hundred pages, and it is both a spread sheet and a break out in category, but it’s every invoice along with the waiver liens, and the sworn statements and a complete package, those are on file, in what we’ve historically done across the street, if anyone would like to see those. Kritzman: Thank you. Brosnan: Madam Chair? McIntyre: Councilmember Brosnan. Brosnan: Thanks, Madam Chair. Through the Chair to either Mr. Taormina or Mr. Knapp, the Petitioner indicates that there is a 1.3 million dollars taxable value prior to the improvement. Do we have an estimate on what the taxable value will be after the improvement? Taormina: Yeah, the projected taxable value is 7.7 million dollars, and I think that – Zarbo: And that’s been established, correct Mark? That’s in the plan and set and established, as it was, again, across the street so that you can set your incremental increases. 7 Taormina: Yeah, well, again, it’s a projection on what the developer is to determine the taxable value of the property upon completion of all the improvements. Whether or not he achieves that, you know, that will be an evaluation that’s done ultimately by the Assessment Department and it may be more, it may be less, and would affect the outcome of the incremental value going forward, but again it’s a projection that they make in order to set the course of the tax capture period, thirteen years it’s projected, that if they attain that true cash on that taxable value that they would be fully reimbursed for the 2.5 million dollars of the eligible cost. Brosnan: So, the ask then, that’s being made of Livonia taxpayers, is that ask forgiveness of 2.5 million dollars’ worth of taxes up front at this point? Taormina: No. Brosnan: What is the total ask? Taormina: The total ask is 2.5 million dollars of tax increment revenues over the course of the thirteen year, what we’ll call, the payback period to the developer. A portion of which will be the City contribution, but does include all other local taxing authorities, that being Wayne County and others. The total City contribution, if you want to break it down that way, over the thirteen years, would probably be roughly half of that, about 1.7, but bear in mind that over 500,000 of that will go to the local site mediation revolving fund and those are dollars that we can use, the Authority can use, for eligible expenses on eligible properties. So, if you’re looking at just our estimate at this point of what the City portion will be to the developer, it would be about 1.2 million dollars over the course of thirteen years. Brosnan: Alright, that’s all. Thank you. Meakin: Madam President? McIntyre: Councilmember Meakin. Meakin: To Mark. Have we done a Brownfield Authority with this level before? Taormina: Well, across the street. This will be our third. Meakin: Across the street was much bigger than this, though. Taormina: It was larger. It was the reimbursables in that case or the eligible expenses at the leave exceeding six million -- Zarbo: 6.6. 8 Taormina: -- 6.6 million dollars. And then the second Brownfield -- Zarbo: Was the Commons. Taormina: -- was Livonia Commons, and did not reach this level, I believe that was under 2 million, but I’d have to go back and take a look, I’m unfortunately not coming to memory. Meakin: What about the time of payback period? Taormina: All have been thirteen years. Meakin: Okay, what if they’re less? Taormina: Pardon? Meakin: What if the period is less? Does that, how does that effect the payback then? Taormina: Well, it would be reduced, put it this way, should they achieve the two and a half million dollars of reimbursable, if those costs are reimbursed before the thirteen years then, per the reimbursement agreement, no further reimbursement, they could never exceed that two and a half million dollars. If their projections are correct, and we do something less than the thirteen years, then it’s likely they would not be reimbursed fully the two and a half million dollars of eligible expenses. Meakin: Okay, thank you. Kritzman: Madam President? McIntyre: Vice President Kritzman. Kritzman: Thank you. Just a quick question going back on the previous one. If I recall correctly didn’t we have a scenario where the 6.6 was laid out, but didn’t actually because of the way property values were, that we didn’t actually hit that in full. Zarbo: It will not, it will never be hit. And even in the 6.6 it was sort of a reserve of the .6 was for Sears and who knows where that will go. I’m trusting memory, but I think we’re at about 3 million dollars and there’s really little room for any improvements that could be made at that project that would qualify for eligible. Meakin: You’re talking across the street? 9 Zarbo: Across the street, so there’s an example. Meakin: And that’s not what we’re here to talk about tonight, I was just, wanted to remind myself as to whether or not that has happened in the past. That’s all I had. Thank you, Madam Chair. McIntyre: Anyone else? Anyone from the audience? Alright, we have an approving resolution. Meakin: I’ll offer Committee of the Whole. McIntyre: Alright, so we have an approving resolution offered by Councilmember White, we have a Committee of the Whole referral offered by Councilmember Meakin, and this will be on the agenda for the Regular st Meeting, Wednesday, November 1, 2017, and that’s a 7:00 p.m. meeting. Zarbo: Okay, thank you. McIntyre: Alright, thank you, Mr. Zarbo, and thank you Mr. Brauer and thank you Council. With that our Public Hearings are completed this evening. Thank you. Good night. As there were no further questions or comments, the Public Hearing was declared closed at 7:39 p.m. SUSAN M. NASH, CITY CLERK